Thank you, Chairman Shaheen, Ranking Member Barrasso, and distinguished members of the Subcommittee for the invitation to appear at today’s hearing.

The euro area has many problems. Based on the lessons from the past five years, I will argue today that the core of the current crisis, what makes it unique, is Europe’s insufficient ability to make authoritative policy and political decisions for the region as a whole. To correct this weakness, Europe must build a fourfold union that would allow such executive decisions to be made. The four components are: (1) a banking union, (2) a fiscal union, (3) a competitiveness union, and (4) a political union, i.e. institutional reform to embed democratic accountability more solidly in decision making.

In the second part of my testimony, I will explore a few topical questions about the first of these four components, namely banking union.